COURT OF APPEALS OF OHIO, EIGHTH DISTRICT
COUNTY OF CUYAHOGA
NO. 75693
MICHAEL J. O'SHEA, ET AL. :
:
Plaintiffs-Appellees : JOURNAL ENTRY
:
-vs- : AND
:
CLEARY & ASSOCIATES : OPINION
:
Defendant-Appellant :
:
DATE OF ANNOUNCEMENT : MAY 11, 2000
OF DECISION :
:
CHARACTER OF PROCEEDING : Civil appeal from Common
: Pleas Court Case No. CV-
294774
JUDGMENT : AFFIRMED.
DATE OF JOURNALIZATION :
APPEARANCES:
For Plaintiffs-Appellees: Kevin T. Roberts
William J. Telzrow, III
450 Lakeside Place
323 Lakeside Avenue West
Cleveland, Ohio 44113-1009
Kenneth D. Petrey
9th Floor Halle Building
1228 Euclid Avenue
Cleveland, Ohio 44115
For Defendant-Appellant: Matthew P. Moriarty
Brzytwa Quick & McCrystal LLC
900 Skylight Office Tower
1660 West Second Street
Cleveland, Ohio 44113-1411
ANNE L. KILBANE, J.:
Appellant Cleary & Associates ( Cleary ) claims Judge Pat
Kelly erred in finding he did not retain jurisdiction over an
attorney fee dispute with appellees' lawyer. Cleary maintains its
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motion to hold certain fees in escrow was filed prior to the
judge's approval of the final settlement of the underlying class
action, and that jurisdiction was conferred because a judge retains
the right to resolve all fee disputes between attorneys related to
any case in which the court has jurisdiction. We disagree and
affirm.
Brendan Delay was a shareholder in the law firm of Cleary &
Delay Co. L.P.A. and a salaried employee from August 1993 through
March 1997. In August 1995, he brought to the firm a potential
class action lawsuit against Blue Cross and Blue Shield on behalf
of Michael and Gina O'Shea, seeking entitlement to damages for the
covert discounting of hospital billings. The O'Sheas signed an
attorney contract with Delay and Cleary & Delay providing for a
contingent fee. Thereafter, Delay entered into an agreement with
attorneys Roy Lachman and Kevin Roberts to participate in the case
in exchange for a fee division and cost allocation.
Roberts filed the complaint on September 1, 1995, and Delay
and Cleary & Delay first entered an appearance on December 30,
1996, through a motion to compel. During the years of 1995, 1996,
and 1997, Delay expended approximately 547 hours on the O'Shea
case and other Blue Cross/Blue Shield related litigation and spent
$3,557.56 of the firm's money on case related expenses.
On March 30, 1997, Delay resigned from the firm and advised
the O'Sheas that although was leaving Cleary & Delay, he would
still be handling their case at his new firm. Delay noticed all
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counsel in the Blue Cross/Blue Shield action of this change as
well.
On June 9, 1998, a stipulation of settlement was filed in the
class action. Because a resolution appeared imminent, the new and
renamed firm of Cleary & Associates notified Delay of its claim for
expenses and attorney fees for Delay's work while with the old
firm. On July 27, 1998, Cleary filed a motion to place certain
attorney fees in escrow pending the outcome of a division of fees
arbitration and mediation matter then pending before the Cleveland
Bar Association. On July 30, 1998, Delay responded, arguing, inter
alia, that the Cleveland Bar Association did not have jurisdiction
over the matter.
The judge held a hearing on July 30, 1998, to determine the
final approval of the proposed settlement and the appropriate
allocation of attorney fees including costs and expense
reimbursements.
On August 7, 1998, the judge entered final judgment which
found the stipulated settlement to be fair, reasonable and in the
best interests of each class, and noted the disbursement of
attorney fees:
10. With respect to the O'Shea case, Plaintiff's
Counsel are hereby awarded attorney's fees in the amount
of $717,730.27, and reimbursement expenses of $13,413.16,
such amounts to be paid from the Settlement Funds on the
Settlement Effective Date, together with interest from
the date of establishment of the Settlement Fund to the
date of payment at the same net rate as earned by the
Settlement Fund; and each named Plaintiff shall be paid
$2,500.00 from the Settlement Fund. The fees and expenses
shall be paid to Kevin T. Roberts, Brendan E. Delay, and
R. Eric Kennedy, Weisman Goldberg & Weisman, to be
distributed by Plaintiffs' counsel.
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On August 20, 1998, the Cleveland Bar Association determined
that it did not have jurisdiction over the fee dispute, stating:
Upon review of this matter, it is our conclusion
that this dispute does not fall within the coverage of DR
2-107, Ohio Code of Professional Responsibility, and
hence our committee must decline to assume jurisdiction.
It appears to us that your claim arises out of an
agreement entered into with Mr. Delay while he was an
employee of Cleary & Associates. Accordingly, we do not
believe that this is a dispute involving the division of
fees by lawyers who are not of the same firm.
On August 24, 1998, Delay filed a motion to overrule Cleary's
motion as moot. Cleary then argued that the judge should retain
the fees in escrow pending either; 1) the judge's own ruling on the
fee dispute; 2) the outcome of an arbitration proceeding pursuant
to the employment or shareholder's contract between Cleary and
Delay; or 3) settlement through voluntary negotiation between
Cleary and Delay.
On November 13, 1998, the judge issued the following order:
Motion to deposit fees into escrow is denied. Issues
raised in post-settlement motion are not properly before
this court as the underlying action has been settled and
disposed. Both parties have other remedies including
declaratory judgment or creditors bill actions. Neither
are before this court and the motion is denied. All
provisions of this final order may proceed as previously
ordered by this court. All other motions are denied as
moot. Final.
Cleary's sole assignment of error provides:
WHETHER OR NOT THE TRIAL COURT ERRED AS A MATTER OF LAW
WHEN IT OVERRULED APPELLANT'S MOTION TO PLACE CERTAIN
ATTORNEY'S FEES IN ESCROW.
Cleary argues that: (1) the judge properly had jurisdiction
over the parties and all matters relevant thereto because
jurisdiction is vested with the court once the subject matter and
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the parties are recognized; and (2) its motion was not a post
judgment motion because it was filed eleven days prior to the
court's final order and judgment issue on August 7, 1998.
Delay contends the judge did not retain jurisdiction to rule
upon Cleary's motion because the new firm of Cleary & Associates
was never a party to this action, and that the scope of Cleary's
motion, an attorney fee dispute within a closed corporation
concerning a stock restriction agreement, was not an issue for the
judge because it did not affect the members of the class. Delay
further submits that Cleary does not have the capacity to appeal
because it failed to file a motion to intervene pursuant to Civ.R.
24 and is a non-party.
A non-party's failure to attempt intervention in the trial
court necessarily results in an incapacity to appeal. Januzzi v.
Hickman (1991), 61 Ohio St.3d 40, 45, 572 N.E.2d 642, 646. Inits
motion to place attorneys' fees in escrow, Cleary requested
permission to intervene pursuant to Civ.R. 24(B) if the judge
determined its prior appearance in the case, through Delay and
Clearly & Delay, unsatisfactory. It stated: If, for some reason,
any counsel objects to this method of appearance, then Cleary &
Associates requests permission to intervene pursuant to Civil Rule
24. Accordingly, Cleary has standing to appeal.
However, finding that Cleary has standing to appeal does not
mean that Cleary or Delay were proper parties, or that their fee
dispute was a proper issue for resolution in the underlying case.
In Steiner v. Van Dorn Co. (1995), 104 Ohio App.3d 51, 660 N.E.2d
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1256, this Court rejected a claim that a trial court had
jurisdiction to apportion fees among different attorneys in a class
action suit, where the settlement agreement provided for a lump-sum
payment of fees to all plaintiffs' counsel, and the class members
did not object to the amount of the fee award. The Steiner court
held that the trial court's retention of jurisdiction, as stated in
the settlement agreement, applied only to effectuate the agreement
as between the parties to the litigation. (Emphasis sic.) Id. at
54, 660 N.E.2d at 1258. The court also noted that since Civ.R 23
pertains to the protection of the class, it follows that Civ.R.
23(A)(4) does not apply to plaintiff's attorneys who were not part
of the class, and who are not charging that the class was
inadequately protected or represented. Id. at 56, 660 N.E.2d at
1259.
In City Of Seven Hills v. City of Cleveland (1988), 47 Ohio
App.3d 159, 547 N.E.2d 1024, paragraph one of the syllabus, this
Court held the following:
A court of common pleas has no jurisdiction to consider
a post-judgment motion requesting a court order directing
the payment of attorney fees, where such motion is filed
by a non-party and where the complaint contains no cause
of action for attorney fees. Since such jurisdiction
does not exist, it may not be "reserved" by the court in
its final judgment.
Consequently, if the original complaint for an action contains no
cause of action for attorney fees, a non-party to the action may
not file for attorney fees, through a post-judgment motion, as
subject matter jurisdiction does not exist. Id.
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Neither Cleary nor Delay was a party to this action, and their
fee dispute was outside the scope of the O'Shea's action. Although
we find that Cleary has standing to appeal based on its request to
intervene,1 we do not find that the judge erred in dismissing the
motion for lack of jurisdiction, a ruling consistent with our
finding that Cleary's request to intervene, if considered, should
have been denied. Cleary attempted to intervene in order to assert
a claim against Delay; however, Delay himself was not a party to
the litigation.
In order to raise its complaint in the O'Shea case, Cleary
would have had to file a motion to name Delay as a party under
Civ.R. 14 in addition to its motion to intervene. Because Cleary
had no interest in the underlying litigation, it would have no
basis for intervention until Delay became a party. However, Delay
could not be named a party under Civ.R. 14 until a current litigant
moved to include him. In short, Cleary could not become a party
until Delay became a party, and Delay would never be a party unless
named by Cleary. This is nothing more than the Civil Rules acting
to ensure that strangers do not attach themselves to ongoing
litigation, but instead resolve their disputes in separate actions.
Although Cleary complains that requiring a separate action is
inefficient, the opposite is true. There is no reason to maintain
the pendency of this suit when none of the parties has any interest
in the dispute between a law firm and a lawyer. The resolution of
1However, we note that a request to intervene normally should
be included in the caption of a motion.
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their dispute, whether through a civil action, arbitration,
negotiation, or inertia, is of no consequence to the O'Sheas, Blue
Cross & Blue Shield of Ohio, or any other party to this action.
The parties to this case should not be forced to continue to appear
in court and incur attorneys' fees in proceedings in which they
have no interest. The parties here have settled their case, and
should reap the benefits of freedom from court proceedings. They
should not be forced to remain parties while these attorneys engage
in the discovery and argument that will accompany this dispute.
Further, although Cleary's motion was filed before the judge
entered final judgment, it was filed after the notice of
stipulation of settlement, and will, as a result, be treated as a
post-settlement motion. Consequently, since its motion regarding
attorney fees did not affect the members of the class, and was a
satellite issue to the class' complaint and interests, jurisdiction
cannot be conferred on the court. There is no reason why the court
in this action should hold funds in escrow pending the outcome of
an unidentified, unrelated, and quite possibly uninitiated
proceeding between Cleary and Delay. The judge correctly determined
that he lacked jurisdiction to resolve the dispute and that Cleary
and Delay had other means to resolve their dispute. The assignment
of error is overruled.
Judgment affirmed.
It is ordered that the appellees recover from the appellant
their costs herein taxed.
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This court finds there were reasonable grounds for this
appeal.
It is ordered that a special mandate issue out of this court
directing the Cuyahoga County Common Pleas Court to carry this
judgment into execution.
A certified copy of this entry shall constitute the mandate
pursuant to Rule 27 of the Rules of Appellate Procedure.
JUDGE
ANNE L. KILBANE
ANN DYKE, ADMINISTRATIVE JUDGE AND
MICHAEL J. CORRIGAN, J., CONCURRING
IN JUDGMENT ONLY.
N.B. This entry is an announcement of the court's decision. See
App.R. 22(B), 22(D) and 26(A); Loc. App.R.22. This decision will
be journalized and will become the judgment and order of the court
pursuant to App.R. 22(E), unless a motion for reconsideration with
supporting brief, per App.R. 26(A) is filed within ten (10) days of
the announcement of the court's decision. The time period for
review by the Supreme Court of Ohio shall begin to run upon the
journalization of this court's announcement of decision by the